Eric Holder Owes America Some Answers

By Jonathan Weil -
Nov 15, 2012

Eric Holder has said he doesn’t know
if he will stay on as U.S. attorney general, now that President
Barack Obama has been re-elected. Here’s something to help them
decide: A story about how the Justice Department got caught
fudging its numbers on financial-fraud prosecutions -- again.

About five weeks ago, on Oct. 9, Holder held a news
conference to trumpet the results of the government’s Distressed
Homeowner Initiative, which he called “a groundbreaking,
yearlong mortgage-fraud enforcement effort” and “the first
ever to focus exclusively on crimes targeting homeowners.”

Holder said the multiagency initiative, led by the Federal
Bureau of Investigation, ran from Oct. 1, 2011, through Sept. 30
and resulted in 285 indictments and complaints against 530
criminal defendants “for allegedly victimizing more than 73,000
American homeowners.” He also credited the program with 110
civil complaints against more than 150 defendants.

It took two days to discredit the figures. On Oct. 11,
Bloomberg Newsreported that the numbers for the criminal cases
included fraud charges against a Chicago lawyer that were filed
in October 2006, two years before Obama was elected. The lawyer,
Norton Helton, was sentenced in January to 15 years in prison.

Complete List

The Justice Department at the time declined to release a
complete list of defendants’ names. Bloomberg identified the
George W. Bush-era charges from a sample list of eight cases
that the department did provide. In 10 more cases that
individual U.S. attorneys’ offices publicized in news releases
as being part of the initiative, Bloomberg found that six of
them were filed in 2009 and 2010, before the initiative began.

This was the second time in two years that the Justice
Department used trumped-up numbers for a media event on
financial-fraud prosecutions. In December 2010, Holder held a
news conference to tout a supposed sweep by the president’s
Financial Fraud Enforcement Task Force called Operation Broken
Trust. (The mortgage-fraud program was part of the same task
force.) As with the latest initiative, Broken Trust wasn’t
actually a sweep. It was more like picking trash out of a dump.
All the Justice Department did was lump together a bunch of
small-fry, penny-ante fraud cases that had nothing to do with
one another. Then it held a press gathering.

At least on that occasion, the Justice Department promptly
released a list of defendants’ names and case details when I
asked for one. That is how I was able to determine for a
December 2010 column that the government’s Broken Trust numbers
were inflated. Among the handful of cases on the list that I
spot-checked, one defendant was sentenced to probation before
the operation’s supposed start date. Another person on the list
had no record of criminal charges. Other cases clearly had
nothing to do with any actions by the task force.

I asked the Justice Department for its Distressed Homeowner
Initiative list the week after Bloomberg’s Oct. 11 story ran,
and I have been asking ever since. The agency’s leaders and
spokesmen should have had the list at their fingertips when they
made their claims. To date, the agency hasn’t given me a copy
after promising multiple times to do so.

In an Oct. 19 e-mail, a Justice Department spokeswoman,
Adora Andy, said: “We’ll have a list to you -- it will take
some time to pull it together.” On Oct. 26, Andy said: “You
will get a list,” explaining that “this is a labor-intensive
process.” On Nov. 5, she said: “It looks like we should have
the list to you by the end of the week if not sooner.” The week
came and went, with no list.

‘Hold Tight’

On Nov. 13: “Hold tight. Finalizing things on this end.
Should have something to you tonight.” Again, no list. “I
assure you I’m working as hard as I can to get this to you along
with the lead agency on this matter, FBI,” she said later that
day. “It’s just very laborious with so much going on and so
little staff.”

According to last month’s Bloomberg article, a spokesman
for the FBI, William Carter, said some cases that began before
October 2011 were included in the numbers because some type of
law-enforcement action -- including sentencings -- had occurred
during the yearlong period. In other words, the government
engineered the criteria to show as many cases as possible,
notwithstanding Carter’s statement at the time that there was
“no attempt to fudge the numbers.”

It is sad that the Justice Department would pull this kind
of stunt once. But twice? These folks can’t even massage their
numbers competently -- which is a talent that Wall Street’s most
sophisticated fraudsters have in spades. Those are the people
Holder’s troops should be going after, and aren’t.

It is worth repeating that there have been no criminal
convictions of any top executives at the center of the 2008
financial crisis. This is bad enough. But using cockamamie data
to mislead the public about the government’s prosecutions of
financial fraud ought to be a crime.

(Jonathan Weil is a Bloomberg News columnist. The opinions
expressed are his own.)